Schizophrenia is a devastating neurodevelopmental disorder that often emerges in young adulthood, interfering with normal social development. The diagnosis is present in 1-2% of the population and cuts across socioeconomic, demographic and national lines, affects veterans as well as civilians, shaters families, and costs society billions in lost income due to social disability. The social deficits associated with schizophrenia wreak havoc on the lives of individuals who develop the disorder, and these deficits independently predict worse clinical, functional, and occupational outcomes above and beyond positive symptoms and other cognitive deficits. Despite their clinical importance, social deficits are poorly understood and resistant to available treatment options. Furthermore, abnormal neural and autonomic responses to social stimuli appear to underlie these deficits in schizophrenia. For example, patients demonstrate decreased activity of the parasympathetic nervous system (PNS), increased activity of the amygdala, and decreased activity of the ventral prefrontal cortex (vPFC) when performing certain social tasks. The neuropeptide oxytocin plays an important role in social behavior in animals and humans, increasing pro-social behavior and improving social cognition in healthy and autistic individuals. Oxytocin has also been shown to have positive effects on neural and autonomic responses in healthy individuals. Despite its potential as a new treatment for social deficits and for remediation of neurophysiological abnormalities, few studies have examined the effects of oxytocin on social cognition and behavior or on neural and autonomic responses to social stimuli in patients with schizophrenia. We propose a series of experiments aimed at both investigating the underlying neurophysiological mechanisms of oxytocin's pro-social effects and quantifying the potentially clinically useful effects of oxytocinin patients with recent-onset schizophrenia. In order to accomplish these important goals, we will first examine the effects of a single dose of exogenous oxytocin on behavioral and psychophysiological responses using validated social cognition measures in 45 patients with recent-onset schizophrenia and 45 matched healthy comparison subjects. We will also assess PNS activity as indexed by respiratory sinus arrhythmia (RSA) in order to test the hypothesis that oxytocin promotes social behavior by increasing PNS tone. Next, we will examine if oxytocin administration normalizes neural responses to social stimuli by decreasing activity of the amygdala and increasing activity of the vPFC, using a well-studied fMRI social cognition paradigm in 36 of these patients and 36 of these healthy comparison subjects. If successful, these experiments will: 1) Provide novel and important data on the neurobiological factors that underlie social deficits in patients with schizophrenia; 2) Lead to larger clinical trials of oxytoin to improve clinical outcomes in young individuals with recent-onset schizophrenia; and 3) Provide a deeper understanding of the functional and mechanistic relationships linking interrelated neurophysiologic systems that support socially meaningful behavior in healthy and schizophrenic individuals. Studying young adult patients with recent-onset schizophrenia minimizes potential confounds of chronic illness including social isolation, drug abuse and neuroleptic use and maximizes the potential long-term impact of this intervention. Overall, this work has the potential to uncover mechanisms of social dysfunction in schizophrenia, and to identify a novel treatment for the difficult-to-treat social deficits of the illness.